This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.guardian.co.uk/world/2012/oct/31/economists-sandy-damage-us-recovery
The article has changed 6 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| Economists fear worst for superstorm Sandy's damage to fragile US recovery | Economists fear worst for superstorm Sandy's damage to fragile US recovery |
| (about 1 month later) | |
| As the flood waters recede and the states hit by Sandy start the grim task of mopping up, many questions remain, among them: how big an impact will the storm and its fallout have on the US economy? | As the flood waters recede and the states hit by Sandy start the grim task of mopping up, many questions remain, among them: how big an impact will the storm and its fallout have on the US economy? |
| The short answer is: tens of billions of dollars, in damage, lost output and disruption to entire industries. And despite some optimistic forecasts made a day after Sandy moved inland, there are good reasons to think the final tally may be worse than expected. | The short answer is: tens of billions of dollars, in damage, lost output and disruption to entire industries. And despite some optimistic forecasts made a day after Sandy moved inland, there are good reasons to think the final tally may be worse than expected. |
| The devastation caused by Sandy comes at a critical time for the US economy as a whole, which seems to be on a slow march out of the doldrums, even if its pace is too slow for the millions out of work, and for Barack Obama's political fortunes. | The devastation caused by Sandy comes at a critical time for the US economy as a whole, which seems to be on a slow march out of the doldrums, even if its pace is too slow for the millions out of work, and for Barack Obama's political fortunes. |
| Luckily, in that sense alone, Sandy's landfall came too late for its wrath to be felt in the the economic data published before the presidential election, although the delays and confusion may yet cause the bureau of labour statistics to delay publication of its critical jobs report for October, scheduled to come out on Friday. Even if the BLS's number-crunchers can finish their work in time, the two-day outage on the eastern seaboard will put an asterix on the jobs numbers. | Luckily, in that sense alone, Sandy's landfall came too late for its wrath to be felt in the the economic data published before the presidential election, although the delays and confusion may yet cause the bureau of labour statistics to delay publication of its critical jobs report for October, scheduled to come out on Friday. Even if the BLS's number-crunchers can finish their work in time, the two-day outage on the eastern seaboard will put an asterix on the jobs numbers. |
| The real effect won't be felt for several weeks, and it may be months and even years before the final cost of Sandy is calculated. | The real effect won't be felt for several weeks, and it may be months and even years before the final cost of Sandy is calculated. |
| The initial estimates take the usual response to a major natural disaster: yes, there will be losses caused by damage but these will be largely offset by the stimulus of rebuilding. Much lost production will be made up in subsequent weeks as companies and workers catch up with any backlog, while the consumer spending foregone by the days lost to the storm will be merely displaced to later dates or other avenues. Some sectors, such as tourism and transportation, will have permanent losses – empty hotel rooms and airline seats caused by cancelled bookings can't be resold later – but that effect will be brief and limited to the peak of the storm. | The initial estimates take the usual response to a major natural disaster: yes, there will be losses caused by damage but these will be largely offset by the stimulus of rebuilding. Much lost production will be made up in subsequent weeks as companies and workers catch up with any backlog, while the consumer spending foregone by the days lost to the storm will be merely displaced to later dates or other avenues. Some sectors, such as tourism and transportation, will have permanent losses – empty hotel rooms and airline seats caused by cancelled bookings can't be resold later – but that effect will be brief and limited to the peak of the storm. |
| That was the case with Hurricane Irene, which hit the area over a year ago and caused insured property damage worth $4.3bn, according to the Insurance Information Institute. But Sandy had a far bigger impact on the region, and hit a wider area. It may be that the final bill is well in excess of the early numbers being talked about on Tuesday. | That was the case with Hurricane Irene, which hit the area over a year ago and caused insured property damage worth $4.3bn, according to the Insurance Information Institute. But Sandy had a far bigger impact on the region, and hit a wider area. It may be that the final bill is well in excess of the early numbers being talked about on Tuesday. |
| One of the first estimates was from Gregory Daco and Nigel Gault of IHS Global Insight, which said said early calculations of infrastructure damage was for losses worth $20bn. Lost economic activity could boost the overall total to $30bn-$50bn. | One of the first estimates was from Gregory Daco and Nigel Gault of IHS Global Insight, which said said early calculations of infrastructure damage was for losses worth $20bn. Lost economic activity could boost the overall total to $30bn-$50bn. |
| Yet the final tally could be much higher for several reasons. The first is that much of the eastern seaboard – densely populated and containing some of the wealthiest areas in America – was at a virtual standstill for two entire days, as well as the federal government shut down and oil production along the entire coast being interrupted. Those things will help knock a chuck off GDP for the fourth quarter, perhaps 0.5 percentage points, at a time when growth is already slow. | Yet the final tally could be much higher for several reasons. The first is that much of the eastern seaboard – densely populated and containing some of the wealthiest areas in America – was at a virtual standstill for two entire days, as well as the federal government shut down and oil production along the entire coast being interrupted. Those things will help knock a chuck off GDP for the fourth quarter, perhaps 0.5 percentage points, at a time when growth is already slow. |
| Then there is the scope of the rebuilding operation. The scale of damage may be far higher than initial estimates expected, because of the destruction in New Jersey that is still coming to light. That includes both private property and federal and state infrastructure. | Then there is the scope of the rebuilding operation. The scale of damage may be far higher than initial estimates expected, because of the destruction in New Jersey that is still coming to light. That includes both private property and federal and state infrastructure. |
| It is impossible to know at this stage what the economic impact of the destruction and damage to New York's transportation network will cause, over and above the cost of repairing the infrastructure itself. Simply closing the New York City subway for a week alone will have knock-on effects on output, tourism and even employment. Some are talking of up to six weeks before the full network is secured, and the longer the network is closed, the larger the costs will be. | It is impossible to know at this stage what the economic impact of the destruction and damage to New York's transportation network will cause, over and above the cost of repairing the infrastructure itself. Simply closing the New York City subway for a week alone will have knock-on effects on output, tourism and even employment. Some are talking of up to six weeks before the full network is secured, and the longer the network is closed, the larger the costs will be. |
| New York City does have one recent illustration of how economic losses can be far worse than first anticipated: the tragic events of 11 September, 2001. Like Sandy, it did huge damage in the city's financial district, and a cleaning-up operation that lasted for years. Initial estimates of $38bn in insurance claims later shot up to $52bn. The city was expected to lose 57,000 jobs after 9/11, but the BLS later said the attacks cost the economy 143,000 jobs and $2.8 bn in lost wages in the following three months. | New York City does have one recent illustration of how economic losses can be far worse than first anticipated: the tragic events of 11 September, 2001. Like Sandy, it did huge damage in the city's financial district, and a cleaning-up operation that lasted for years. Initial estimates of $38bn in insurance claims later shot up to $52bn. The city was expected to lose 57,000 jobs after 9/11, but the BLS later said the attacks cost the economy 143,000 jobs and $2.8 bn in lost wages in the following three months. |
| Could Sandy be anywhere near as bad? Most people think not. The 9/11 attacks came when the US economy was on a down swing, so it exacerbated an existing trend. Sandy, on the other hand, hit a region that was recovering. But one of the worst-off sectors since the housing boom ended has been the construction industry, and it has the spare capacity to rebuild the Sandy states at a lower cost than would have been the case five years ago. But whether that will be enough to compensate for lower activity and output elsewhere is another matter. | Could Sandy be anywhere near as bad? Most people think not. The 9/11 attacks came when the US economy was on a down swing, so it exacerbated an existing trend. Sandy, on the other hand, hit a region that was recovering. But one of the worst-off sectors since the housing boom ended has been the construction industry, and it has the spare capacity to rebuild the Sandy states at a lower cost than would have been the case five years ago. But whether that will be enough to compensate for lower activity and output elsewhere is another matter. |
| Our editors' picks for the day's top news and commentary delivered to your inbox each morning. | |
| Our editors' picks for the day's top news and commentary delivered to your inbox each morning. Enter your email address to subscribe. |